Hitting pay dirt: mining industry continues to cash in on soaring metals prices.By all accounts, it's a good time to be a miner in Mexico, whether you're a major player on the world stage or a junior prospector hoping to hit the mother lode Mother Lode, belt of gold-bearing quartz veins, central Calif., along the western foothills of the Sierra Nevada. The term is sometimes limited to a strip c.70 mi (110 km) long and from 1 to 6 1-2 mi (1.6–10.5 km) wide, running NW from Mariposa. .
Mexican mining companies are flying high these days as soaring soaring: see flight; glider.
Sport of flying a glider or sailplane. The craft is towed behind a powered airplane to an altitude of about 2,000 ft (600 m) and then released. metals prices on global markets emerge from several years in the doldrums doldrums (dŏl`drəmz) or equatorial belt of calms, area around the earth centered slightly north of the equator between the two belts of trade winds. . Silver prices hit 16-year highs in early April of US$8.15 per ounce ounce, in zoology
ounce, in zoology: see leopard.
ounce, unit of measurement
ounce: see English units of measurement. , up from about US$5 an ounce in April of last year. Similarly, copper prices recently hit an eight-year high and gold was near a 15-year high.
The price recovery in everything from gold and silver to copper is a welcome boom in Mexico, home to the world's third-largest copper producer, Grupo Mexico, and the world's biggest refined silver producer, Industrias Penoles.
BACKBONE OF BOLSA
Shares in the Mexican mining giants have been among the best performers on Mexico's IPC (1) (InterProcess Communication) The exchange of data between one program and another either within the same computer or over a network. It implies a protocol that guarantees a response to a request. stock index in the past year. Stock value for Penoles, the best performer on the index, is up an astounding a·stound
tr.v. a·stound·ed, a·stound·ing, a·stounds
To astonish and bewilder. See Synonyms at surprise.
[From Middle English astoned, past participle of astonen, 260% in the last 12 months.
Grupo Mexico stock, the third-best performer, rose steadily in the past year as the company, buoyed by the improving metals climate and aggressive moves to refinance Refinance
1. When a business or person revises their payment schedule for repaying debt.
2. Replacing an older loan with a new loan offering better terms.
When a business refinances they typically extend the maturity date. debt, saw its shares rise more than 40% since January. After years of financial struggle and production cutbacks that left machinery listing in its giant open-pit copper mines, Mexico City-based Grupo Mexico looks like it could be finally out of the clouds after its 1999 purchase of U.S.-based Asarco Inc. forced it to take on a mountain of debt.
The company started a phenomenal recovery in April 2003, when it completed a US$879.2 million credit restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , extending its debt maturities and allowing it to take advantage of rising copper prices, currently at about US$1.30/pound compared to about 70 cents in the second quarter of last year.
Investors applauded the move and the company's stock skyrocketed, more than tripling since then to over 40 pesos a share currently, up from near 12 pesos a share before the restructuring was announced.
In recent months the company rewarded investor confidence by announcing in March that it had successfully repaid US$200 million in loans taken out by its rail unit a year ago. Grupo Mexico paid the debt by issuing bonds, paying off dollar debt and converting it to more manageable peso-denominated currency.
These days the company is talking about boosting output at its copper mines and is working on a deal to transfer its Mexican mining shares to its Southern Peru Copper subsidiary.
If accepted by Southern Peru, the deal could help Grupo Mexico's debt profile even further and allow it to piggyback piggyback
1. A broker trading in his or her personal account after trading in the same security for a customer. The broker may believe the customer has access to privileged information that will cause the transaction to be profitable.
2. on Southern Peru for a listing on the New York Stock Exchange New York Stock Exchange (NYSE)
World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . Not least of all, a successful deal would boost Grupo Mexico's copper output even further, good news considering every 1 cent improvement in the copper price adds about US$20 million to company revenue.
PLANS FOR EXPANSION
Penoles, which owns the world's largest silver mine, can't complain either. Riding the rise in silver prices in recent months, the company plans to spend as much as US$300 million dollars in 2004 in mine expansions and exploration.
The company, also based in Mexico City Mexico City
Spanish Ciudad de México
City (pop., 2000: city, 8,605,239; 2003 metro. area est., 18,660,000), capital of Mexico. Located at an elevation of 7,350 ft (2,240 m), it is officially coterminous with the Federal District, which occupies 571 sq mi , will invest US$110 million this year in its first foray into Verb 1. foray into - enter someone else's territory and take spoils; "The pirates raided the coastal villages regularly"
encroach upon, intrude on, obtrude upon, invade - to intrude upon, infringe, encroach on, violate; "This new colleague invades my a pure copper play, the Milpillas copper project. The project has a total price tag of US$203 million and is set to come on line in 2005. In exploration, Penoles aims to concentrate on its star Fresnillo silver mine in Zacatecas state and gold ventures in the states of Sonora and Durango. Enthusiasm for the improved global metals market is reflected in Mexican mining statistics overall.
The Mexican statistics institute Inegi said in its most recent report of the mining industry that silver output rose nearly 18% in January, compared to the same month a year ago. In the same month gold output rose nearly 15%, lead production was up 22% and copper output soared more than 40%. Zinc production fell about 3% in the month.
Rising global metals prices are also drawing a lot of junior miners to Mexico, known since colonial times for its rich mineral wealth. The federal government is taking the upturn in prices, which is cyclical cyclical
Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. , seriously and plans to extend some 2.5 billion pesos in financing to small miners this year.
The funds represent a 20% rise over mining credit last year and are about six times the financing provided by the government in 2000. By all accounts, jumping on the cyclical upsurge in global metals prices is an opportunity nobody in the Mexican mining industry can afford to pass up.
George Terrats is a Mexico City-based freelance writer.
Non-metallic Mineral Production Value in Mexico: 2003 In millions of dollars Coke 197 Mineral Coal 183 Salt 84 Flouride 81 Sulphur 73 Gypsum 47 Silice 44 Others 70 Total: US$779 million Note: Table made from pie chart. Metallic Mineral Production Value in Mexico: 2003 In millions of dollars Copper 572 Silver 462 Zinc 368 Gold 259 Iron 145 Lead 76 Others 79 Total: US$1.96 billion Note: Table made from pie chart.